Avrupa Minerals (TSXV:AVU) (“Azarga Metals” or the “Company”) announced the positive findings of an independently prepared preliminary economic assessment (“PEA”) for the development of its wholly-owned Unkur Copper-Silver Project in the Zabaikalsky administrative region of eastern Russia on 30 August 2018. At the request of IIROC the Company wishes to clarify certain disclosure in its August 30, 2018 news release titled “Azarga Metals Announces Positive, Independent, Preliminary Economic Assessment on Unkur Copper-Silver Project”.

This announcement covers the PEA but has been expanded to allow the Company and Tetra Tech, Inc. (“Tetra Tech”) to make additional comments on: (i) metallurgical process; and (ii) silver price forecast. This release includes such additional comments along with the PEA summary.

Regarding metallurgical process, further information and background on the metallurgical process(es) summarized in the original PEA announcement, used to achieve 94% recoveries for both copper and silver and produce a very high grade concentrate product containing approximately 75.0% copper and  6,500g/t silver have been included in the Mining and Processing and Product and Marketing sections below.

Regarding silver price. A silver price of US$20 per ounce was used in the PEA and while it may appear high relative to the current spot price of less than US$15 per ounce, the forecast price is justified on the basis that: (i) the forward curve for silver, permanently in contango, only dropped below US$20 per ounce for the 2020-2021 period (matching potential development timeframe for Unkur) in June 2018 and has been above that for most of the last three years; and (ii) the average long-term silver price forecast of a number of independent analysts referenced (including Macquarie Bank, UBS, Credit Suisse, BMO, ABN Amro and TD Economics) remains at approximately US$20 per ounce. It should also be noted that copper is the primary revenue metal in the PEA.

The PEA is based on the current Inferred Mineral Resource estimate for Unkur of 62 million tonnes at 0.53% copper and 38.6g/t silver, containing 328,600 tonnes (724 million pounds) of copper and 76.8 million troy ounces of silver, as announced by the Company on 27 March 2018 (“2018 Mineral Resource”).

Dorian L. (Dusty) Nicol, Azarga Metals’ President and CEO commented on the PEA, “We are extremely encouraged that even based only on our initial exploration, Unkur is able to demonstrate a positive PEA result.”. He then went on to say, “Additional exploration is expected to significantly grow the size of the deposit and this will likely continue to enhance the project economics when an updated PEA is prepared.”

The following table summarizes key Unkur Project PEA metrics.

Table 1: Key Unkur Project PEA metrics

Parameters / metrics

Amount1
Production
 – Total mill feed 16.9 million tonnes LOM / 2.0 million tonnes per year
 – Copper feed grade (ave) 0.66%
 – Silver feed grade (ave) 57.9g/t
 – Initial LOM 8-years
 – LOM copper recovery 94.0%
 – LOM silver recovery 94.0%
 – Concentrate grade – copper (dry) 75%
 – Concentrate grade – silver (dry) 6,500 g/t
 – Total copper production 105,737 tonnes LOM / 13,217 tonnes per year (ave)
 – Total silver production 29.63 million ounces LOM / 3.70 million ounces per year (ave)
 – LOM strip ratio 9.7:1
Capital and costs
 – Pre-production capital US$186.6 million (including US$37.3 million contingency)
 – LOM sustaining capital US$14.4 million
 – Closure costs US$3.6 million
 – Copper C1 cash cost (excl. G&A) US$0.38 per pound (